Employee turnover can be a significant challenge for businesses, especially in today’s competitive job market.
High turnover disrupts operations, inflates recruitment costs, and affects team morale. As a manager, understanding why employees leave and how to address these issues is crucial to fostering a productive and loyal workforce.
One of the truisms in HR is that new hires join a business. When people are hired, they are signing on to contribute their labour and best efforts into delivering the bigger vision for the organisation. No employee ever joins a business with the intention of failing or doing a bad job.
People who resign from a business, particularly in the first year of their hire, are not leaving the business vision, but something deeper.
Key Reasons for High Employee Turnover
- Poor Management Practices Employees often leave managers, not companies. Poor communication, lack of recognition, and micromanagement are common complaints. Managers who fail to provide clear expectations or support can drive talented employees to seek better leadership elsewhere.
- Lack of Career Development Opportunities Ambitious employees need to see a future within the company. When growth opportunities are unclear or unavailable, they may look for roles where their career can progress. Regular performance reviews and training programs can demonstrate investment in employee development.
- Inadequate Compensation and Benefits Competitive pay and benefits are non-negotiable in retaining talent. If employees feel undervalued financially, they’re more likely to be swayed by offers from competitors offering better packages.
- Negative Organisational Culture A toxic work environment, lack of inclusivity, or misaligned values can lead to disengagement. Employees want to work for organisations where they feel respected, included, and aligned with the company’s mission.
- Limited Work-Life Balance With the rise of flexible work expectations, businesses that don’t adapt may see higher turnover. Long hours, rigid schedules, or insufficient remote work options can drive employees to seek more accommodating employers.
- Poor Onboarding and Induction Processes First impressions matter. A disorganised or unwelcoming onboarding process can set the tone for an employee’s entire experience. A structured induction program helps employees integrate faster and feel valued from day one.
The Fulfilment – Performance Link
Wilson Learning Research have found over a number of studies that:
- The single most important factor in creating a sense of fulfilment is the leadership skills of an employee’s manager.
- Between 56% and 83% of fulfilment could be predicted from the skills and practises of the manager or leader.
- When employee fulfilment was high, so was performance; when employee fulfilment was low, so was performance.
- 39% of bottom-line performance can be attributed to employee fulfilment.
Their studies suggest that, “pay, compensation, work conditions, promotions and benefits are important, but are more often associated with creating dissatisfaction than with fulfilment. In other words, when people feel their salaries are not fair, work conditions are poor, or the benefits are insufficient, they feel dissatisfied with the organisation and their job.”
“However, even if these conditions are perfect, this elimination of dissatisfaction does not mean that employees feel fulfilled, only that they no longer are dissatisfied. And it is employee fulfilment, not satisfaction, that predicts performance. It is the individual manager who creates, or fails to create, fulfilment.”
Jim Collins wrote in “Good to Great” “If you have the right people on the bus, they will be self-motivated. The real question then becomes: How do you manage in such a way as not to de-motivate people?“
Why Turnover Happens In The First 45 Days
So what happens when people leave after only a little while? The Wynhurst Group (2) have found 22% of all employee turnover occurs in the first 45 days of employment, with issues being identified including either overselling or underselling the job or there not being a cultural fit between workplace culture and the individual.
“These are subtle but very important variables in assuring that a job “fits” the individual. … “What counts” – values live in the air we breathe. Our bodies feel excitement (innovation), boredom (rule-bound regulations), dishonesty (people have smiles on their faces but not in their eyes), or respect (we’ll create a workaround so you can honour your commitments with your family).”
“Cultural values (not what’s posted on the website) but what’s lived in the corridors and boardrooms are instinctually known to us. This sense of “connect” or “disconnect” may be hard to decipher or discuss in the short term but this lack of synchronicity or “fit” accounts for a large number of new hires who leave shortly after joining an organization. The job is right but the culture is not.”
These issues come down to the manager not being honest with candidates about the true nature of their role, or about the workplace culture they have created. As a result, people become de-motivated and take action to move to another opportunity. People leave managers.
Financial Implications of High Turnover
The cost of employee turnover extends beyond recruitment expenses. Lost productivity, the time required to train new hires, and the potential loss of institutional knowledge all contribute to the financial burden. Industry research suggests turnover costs can equate to 50-200% of an employee’s annual salary, depending on their role.
Strategies to Reduce Employee Turnover
- Invest in Leadership Development Equip managers with the skills to lead effectively through training programs focused on communication, conflict resolution, and emotional intelligence. A good manager can significantly enhance team retention.
- Offer Career Growth Opportunities Create clear pathways for advancement. Encourage lateral moves, cross-training, and leadership roles within the organisation. Regularly discuss career goals during performance appraisals.
- Ensure Fair and Competitive Compensation Regularly benchmark salaries and benefits against industry standards. Consider non-monetary benefits like wellness programs, additional leave options, or flexible working arrangements to enhance job satisfaction.
- Build a Positive Workplace Culture Promote diversity, equity, and inclusion. Encourage open communication, celebrate achievements, and provide platforms for employee feedback. Employees who feel heard and valued are more likely to stay.
- Adapt to Flexible Work Trends Assess how hybrid or remote working models can fit into your organisation. Providing employees with greater control over their work environment can boost morale and reduce attrition.
- Strengthen Onboarding Processes A smooth induction experience sets the tone for new hires. Provide all necessary tools, introduce them to team members, and offer ongoing support through buddies or mentors. Ensure they feel welcomed and prepared to succeed in their roles.
- Recognise and Reward Contributions Regularly acknowledge individual and team achievements, whether through formal awards, bonuses, or simple verbal recognition. Showing appreciation fosters loyalty and boosts morale.
- Foster Transparent Communication Keep employees informed about organisational changes and decisions. Transparency builds trust and reduces uncertainty that can lead to turnover.
What Managers Can Do About It
So as a manager, what can you do to motivate your employees and as a result, increase retention?
Daniel Pink in his book “Drive: The Surprising Truth About What Motivates Us” suggests that traditional carrot and stick, control type management is no longer working. He suggests that we need a new approach to management and motivation that is based on self-determination theory.
He believes people are motivated by three intrinsic drives. “This new approach has three essential elements: 1. Autonomy – the desire to direct our own lives. 2. Mastery — the urge to get better and better at something that matters. 3. Purpose — the yearning to do what we do in the service of something larger than ourselves.” (3)
By providing employees with autonomy over all or the main aspects of their work, by allowing them to develop their skills at things that matter to them, and to tap into their desire to contribute to a cause bigger than them, managers can increase motivation and fulfilment,
If you take action to support these drivers of behaviour, then you will not be the manager that people leave … but become the manager that people praise in years to come as, “The best manager they have ever had”.
If you would like to know more about what motivates people, then this video outlining Daniel Pink’s theory in more detail is a great start.
Conclusion
Employee turnover is a complex issue, but with a proactive and strategic approach, Australian managers can create workplaces where employees feel valued, motivated, and engaged. Addressing the root causes of turnover and implementing retention-focused practices will not only improve morale but also strengthen your organisation’s bottom line.
